Banks were the only buyers of government bonds in the last weekly auction held on Wednesday.
Auctions are held by the Central Bank of Iran on behalf of the Economy Ministry to raise funds for the government’s deficit spending.
Buyers of the debt normally are banks, credit institutions, investment funds and institutional investors. The 33rd auction barely generated 10,117 trillion rials ($24.9 million) from banks and credit institutions in the absence of retail and institutional investors.
The shortest maturity date was November 2023 at 23.95% for bonds maturing June 2024. The rate for short-term debt was 23.75%.
All the bonds sold this time around were short-term. Banks mostly prefer short-term debt that have lower yields while institutional investors are more inclined towards long-term debt with higher yields. There were no buyers at the 32nd auction.
The Economy Ministry said it will hold the next auction on January 10 to offer 57.47 trillion rials ($141.5m) in new debt maturing in November 2023.
Bond auctions started in May 2020 when banks and investment funds were instructed by the CBI to allocate a part of their resources to buy government debt. Later, institutional investors and retail traders in the stock market joined.
According to ministry data, 665.272 trillion rials ($1.63 billion) bonds have been sold since March.
In addition to bonds, the government has sold treasury bills worth 350 trillion rials ($991.5m) this year. Treasury bills are underwritten and given to contractors in lieu of unpaid bills.
In the last fiscal year ending March 2022 the CBI held 36 auctions generating 906 trillion rials ($3b) down 27% from the year before.
Debt is offered in line with the provisions of the 2022-23 budget in which the government is allowed to offer 860 trillion rials ($2.8b) by next March.
The ministry said recently that it paid the principal and interest on bonds worth 1,445.7 trillion rials ($3.56 billion) until November 4.
More than 1,079 trillion rials ($2.65b) was the principal and 366.061 trillion rials ($301.6m) interest it being over and above government income from new debt offered during the period.
